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Labour Research April 2017

Entrenched inequality still exists

A new review of race in the workplace finds that race inequality stubbornly persists. And unions warn that real progress will continue to be elusive without government action to back up the review report’s recommendations.

Unions and the TUC have welcomed the report of a government-commissioned review on race in the workplace, published in February. However, they warn that without government action to ensure employers comply with the report’s recommendations, progress towards real racial equality in the workplace will be slow.

As TUC race equality officer Wilf Sullivan told Labour Research, most of the report’s recommendations are “things that we have been advocating for years”. But he highlighted the danger that without legislation, “those companies who are already doing something will look at it and make some changes, and those companies that do nothing will continue to do nothing”.

The review was led by former chief executive of the Mitie outsourcing group and Conservative peer Baroness Ruby McGregor-Smith. Her report makes a number of recommendations for employers, aimed at eliminating workplace practices that hinder the recruitment, career development and progression of black and minority ethnic (BME) workers, and at promoting more diverse workforces also covering supply chains.

The McGregor-Smith report recommendations

The government-commissioned review report The time for talking is over, now is the time to act, makes the following recommendations:

• employers with more than 50 employees should publish five-year “aspirational targets” in relation to BME employees in their organisation and report against these annually. The public sector should lead the way in ensuring targets are set in any organisation that spends taxpayers’ money;

• organisations with 50 or more employees should publish a breakdown of employees by race, ideally by pay band. The government should legislate to require employers to do this;

• all employers should consider taking action to improve reporting rates among the workforce. This should include clearly explaining how supplying data will assist the business in increasing diversity overall;

• all public and private organisations should use contracts and supply chains to promote diversity “ensuring that contracts are awarded to bidders who show a real commitment to diversity and inclusion”;

• all organisations should ensure all employees undertake unconscious bias training. The government should produce a training resource to facilitate this;

• businesses with 50 or more employees should identify a board-level sponsor for all diversity issues, including race, accountable for the delivery of aspirational targets;

• senior leaders should undertake “reverse mentoring” with individuals from different backgrounds “to better understand their unique challenges”. Those in leadership positions should have promotion of diversity included in their performance indicators;

• in recruiting staff, all employers should ensure that long- and short-lists reflect the local population. Larger employers should ensure the selection and interview process is undertaken by more than one person, and this should ideally include individuals from different backgrounds to help eliminate bias. Employers should also avoid focusing on which school or university candidates went to;

• employers should seek to provide work experience to a more diverse group of individuals, beyond their normal social demographic. This should also mean stopping the practice of unpaid or unadvertised internships; and

• the government should work with the employer-backed charity Business in the Community (BITC) to establish online resources to promote best practice. The government should also publish a guide for employers on “how to discuss race in the workplace”.

BME participation in the workplace

It points to official figures showing that while one in eight of the working age population in the UK comes from a BME background, they make up only one in 10 of the workforce and hold only one in 16 of top management positions.

And the employment rate for BME workers is just 62.8%, compared to 75.6% for white workers. Some BME groups are even further behind — the rate for those from a Pakistani or Bangladeshi background is only 54.9%.

As well as being less likely to participate in the workforce, BME workers are also less likely to progress to higher levels. McGregor-Smith says that barriers exist from entry level to board level, preventing BME workers from reaching their potential. The report suggests that this is also damaging for productivity and the economy. It refers to an estimated economic benefit of 1.3% or £24 billion added to GDP if there were improved participation and progression for BME individuals across the labour market.

BME workers experience hostile workplace

Meanwhile, two-thirds of BME individuals who responded to the review’s call for evidence say they have experienced racial harassment and bullying in the workplace in the last five years. And almost three-quarters (71%) of respondents cite a lack of connections to the “right people” as a factor in their lack of progression at work.

McGregor-Smith also points out that BME workers are more likely to perceive the workplace as hostile; are less likely to apply for, and be given, promotions; and are more likely to be disciplined or judged harshly.

Against this backdrop, it’s perhaps unsurprising that the report’s title, The time for talking is over, now is the time to act, encapsulates the need for urgent action after years of discussion about these issues with very little changing, particularly in the private sector.

Diversity targets

Importantly, the report proposes that organisations with 50 or more employees set five-year targets to increase diversity and the representation of BME staff at all levels, ensuring that they better reflect the ethnic make-up of their local area.

This means employers in areas such as London and Birmingham where more than 40% of the local population have a BME background — or Slough and Walsall where the figure exceeds 50% — should be striving to ensure they have a similar proportion of BME staff in their workforces. This should apply to staff in high-level positions as well as the lower-level grades in which BME staff are more likely to be found. McGregor-Smith says there is no reason why every organisation in the UK should not have a workforce that proportionately reflects the diversity of the community they operate in, “at every level”. The five-year targets would be voluntary and “aspirational”, allowing employers to be “open and transparent about what they are trying to achieve”.

The report suggests that the targets could provide a means for investors to hold company boards to account. It also acknowledges a role for unions “to work with employers to establish targets and to hold them to account, measuring performance against these targets”.

Pay reporting

But McGregor-Smith’s recommendation of legislation to make larger businesses publish their ethnicity data by salary band, to demonstrate their progress in achieving these targets, was rejected by the government. In a letter to McGregor-Smith, business minister Margot James stated the government’s claim that a business-led voluntary approach was the best way of “bringing about lasting change”. This line echoes the business-led voluntary approach to gender pay gap reporting advocated by the Tory-led coalition government from 2010 to 2015, which resulted in only a handful of employers properly disclosing their gender pay gap figures. Following the failure of this approach, the coalition did eventually commit to regulations on statutory gender pay reporting which are finally being implemented this month (see Labour Research, March 2017, pages 9-11).

On race and pay reporting, James said the government expected businesses to respond to the “compelling” case put by the report without the need for legislation, but that it would “monitor progress and stand ready to act if sufficient progress is not delivered”.

TUC position

While welcoming the report, the TUC says that attempts to eliminate racial discrimination at work will not be effective without a statutory obligation on businesses to publish their data. Waiting to see how businesses respond “is not an option”, it said. It has called on the government to adopt a comprehensive race equality strategy and action plan addressing the race discrimination experienced by BME communities in the labour market, the workplace and in wider society.

The TUC position has been echoed by the UNISON public services union which called on the government to use its procurement and purchasing power to promote change in the private sector, “extending the statutory equality duty to companies providing public service contracts as a mechanism to drive best practice”.

The TUC’s Wilf Sullivan said that it’s essential that employer targets go hand in hand with statutory employer disclosure of data on BME participation at different pay levels. “It is vital to have the empirical evidence of what is happening in terms of discrimination,” he said. “If you haven’t got that, it makes life much more difficult to argue that they should be doing something about it.”

TUC analysis of discrimination

TUC analysis last year found an overall pay gap between BME and white workers of 5.6%. The gap was higher for black workers at 12.8%. It increased dramatically for those with higher educational qualifications — for graduates, the gap between black and white workers was at its widest at 23%.

Separate TUC analysis last year showed that BME workers were twice as likely as white workers to be unemployed, but the disparity increased when comparing for those with fewer or no qualifications.

The TUC report, Living on the margins, issued in 2015 showed that BME workers had been disproportionately affected by the growth in precarious forms of work since the 2008 recession. While just 11% of the workforce were from BME backgrounds, they comprised 17% of workers in temporary jobs and 21% of those in agency work.

Forty per cent of BME workers in temporary work said they were only doing so because they couldn’t find a permanent job. Moreover, 37.6% of BME workers worked in low-paid industries, such as cleaning, care work and catering, compared to under three in ten (29.6%) white employees.

The report also highlighted the high levels of underemployment among BME workers — those working part-time but wishing to work additional hours. Updated TUC analysis of Office for National Statistics data last year showed that 15.3% of BME workers were underemployed, compared to 11.5% of white workers.

Work by unions

Work by unions to support the inclusion and progression of BME workers is highlighted in case studies in the review. This includes work by the NUT teachers’ union to support promotion pathways for BME teachers; research on the impact on BME teachers of performance management and capability processes, and support for their professional development by the NASUWT teaching union; research on the highly negative experiences of BME staff by the UCU further and higher education (F&HE) union; and mentoring and training schemes for BME workers supported by the Scottish TUC.

The STUC has been running schemes to support career development for BME workers, including Moving into Management courses and a mentoring project for BME workers in F&HE.

It says that the clustering of BME employees in lower grades is a clear concern for the Scottish economy. But it says that it is clear that an ethnically diverse workforce brings benefits to business in terms of better understanding the needs of a diverse customer or service user base.

While also welcoming the report’s findings, STUC assistant secretary Helen Martin told Labour Research that voluntary schemes are not sufficient as they are “unlikely to create the step change that we so desperately need”. Martin said more was needed “to enforce equality law, improve access to justice and ensure better outcomes for black workers”.

Good practice

Several examples of good practice by employers are also highlighted in the report, including “diversity champions” at Lloyds Banking Group, “unconscious bias” training at Royal Bank of Scotland, and Arts Council England programmes to increase ethnic diversity in the arts and culture sectors.

Also mentioned is the NHS Workforce Race Equality standard, established in 2015, which requires NHS providers to collect, analyse and publish workforce data on the proportion of NHS staff from BME backgrounds across all professions and in every grade. The standard also requires providers to measure progress in closing the gap between the experience and treatment of BME staff and their white colleagues.

Erosion of progress

While there has been some progress in the public sector, the TUC submission pointed out that in the private sector, BME workers are “virtually non-existent at the most senior levels of major companies”. And the UNISON submission warned that austerity is also leading to erosion of progress in promoting race equality in public services. In the past the public sector has provided stable and secure employment for BME communities, but these communities have been disproportionately affected by job cuts.

‘Unconscious’ bias

On recruitment and progression, McGregor-Smith says that employers need to “stop hiding behind the mantle of ‘unconscious’ bias”.

This relates to the tendency of organisations and individuals to hire and promote workers “in their own image”. She says that unconscious bias is much more pervasive and potentially more insidious than overt discrimination “because of the difficulty in identifying it or calling it out”.

But she adds that she has to question the extent to which this bias is truly unconscious, and whether by terming it “unconscious”, organisations are allowed to hide behind it.

McGregor-Smith refers to “discrimination and bias at every stage of an individual’s career, and even before it begins”, from “networks to recruitment and then in the workforce”. And she points to the distinct lack of role models for BME people.

Performance management

The TUC highlighted the negative impact of disciplinary, capability and performance management procedures on BME staff in its submission to the review. It cited a report last year by the Royal College of Midwives which showed disproportionately high levels of disciplinary action, suspension and dismissal among BME midwives.

And in the civil service, research into the operation of its performance management scheme, undertaken for the PCS civil service union last year, highlighted its discriminatory impact, with BME, disabled, older and part-time staff more likely to receive a “must improve” rating. The Cabinet Office announced changes to the system at the end of last year following a well-organised union campaign.

In its submission, the TUC said employers needed to ensure criteria for performance management processes were not culturally biased, with performance of tasks measured by objective standards rather than subjective judgements. Both performance management and disciplinary processes need to be subject to ethnic monitoring, it said, and significant disparities in outcomes between ethnic groups need to be investigated.

While the recommendations of the McGregor-Smith review are likely to have a greater impact on workers in the public sector and large private sector companies, the TUC points out that there are vast numbers of BME workers who are subject to casualisation and underemployment who are unlikely to feel the benefit (see box above).

A new LRD booklet, Promoting race equality at work — a union rep’s guide, provides guidance for reps on negotiating agreements to reduce racial inequality and promote diversity, and combating racial harassment, bullying and abuse. Price £8.05 from
www.lrdpublications.org.uk/publications.php?pub=BK&iss=1865

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